In many ways, 2019 was a year of unrest in the sports industry.
The NFL started its year with a controversial no-call in the NFC Championship that helped the L.A. Rams beat the New Orleans Saints, and stirred so much outrage that the NFL instituted a rule change for its next season allowing coaches to challenge a missed pass interference call. Nike began the year under the microscope after Duke star Zion Williamson tore through his Nike sneaker in a February game against North Carolina. The NBA experienced a political crisis in China sparked by a single tweet sent by a team GM in support of the Hong Kong protesters. Nike continued its marketing efforts around Colin Kaepernick, and the NFL arranged a Kaepernick tryout that did not go well for any of the parties. Tiger Woods, who had not won a Major championship in 11 years, completed one of the great sports comeback stories of all time by winning The Masters. The U.S. women’s national soccer team won the FIFA Women’s World Cup amid a lawsuit against U.S. soccer over gender pay discrimination. In Major League Baseball, the Houston Astros returned to the World Series for the second time in three seasons, lost to the Washington Nationals, then were accused of a cheating scheme that now threatens the reputation of the entire league.
New Hampshire Gov. Chris Sununu shows his receipt after placing the first legal sports wagering bet on his mobile phone for the New England Patriots to win the Super Bowl at a sports bar in Manchester, N.H., Dec. 30, 2019. (AP Photo/Charles Krupa)
The U.S. Supreme Court struck down the federal ban on sports betting in 2018, allowing individual states to legalize sports betting, and in 2019 a slew of states did so. Thirteen states now have some form of legal sports betting. Eight more voted in late 2019 to legalize and will launch in 2020, and another handful have introduced bills to legalize.
Many experts say full federal legalization is still unlikely in the near future (though that is what the NBA and other pro leagues are pushing for), but by the end of 2020 around half of the United States will offer legal sports betting. That will have an impact on everything from television ratings (surveys suggest that viewership goes up when fans have money riding on a game) to in-game attendance (sportsbooks have done very well in New Jersey, including at Meadowlands, right by MetLife Stadium, home of the NY Giants and NY Jets) to the value of pro franchises.
Meanwhile, FanDuel and DraftKings, the two “daily fantasy sports” apps that spent most of 2015 and 2016 arguing in court battles that they were not gambling providers, have embraced legalized betting and will both be public by mid-2020; FanDuel sold in 2018 to Paddy Power Betfair, a publicly traded Irish betting company, and DraftKings announced at the end of 2019 that it will be taken public in 2020 by merging with an already-public SPAC (special purpose acquisition company), Diamond Eagle. FanDuel and DraftKings will continue to race to open sportsbooks in legal states, while the incumbent brick-and-mortar casinos like MGM and Caesars will keep signing partnerships with the big pro sports leagues.
NCAA makes its peace with college athletes getting paid
Clemson coach Dabo Swinney celebrates with quarterback Trevor Lawrence after Clemson defeated Ohio State 29-23 in the Fiesta Bowl NCAA college football playoff semifinal Saturday, Dec. 28, 2019, in Glendale, Ariz. (AP Photo/Ross D. Franklin)
October brought a sweeping shift in the NCAA’s long-held hard line against letting college athletes get any form of compensation. The NCAA Board of Governors voted to direct all its divisions (DI, DII, DIII) to launch a review of how to change their rules to allow athletes to receive compensation for their name, image, and likeness (called “NIL” rights), and to prepare to make those changes by January 2021.
In other words, the actual change won’t happen until 2021 at the earliest, but NCAA divisions and officials will spend 2020 preparing for the change.
It is a major shift, and one that was forced by California’s SB206 or Fair Pay to Play Act, which California Gov. Gavin Newsom signed in September. A number of states drafted similar bills, prompting the NCAA to yield.
The change will not pacify those who have long argued college athletes are exploited, and that tuition is inadequate compensation. It will not mean college athletes get paid to play their sport; rather, those stars who get offered endorsement deals, sponsorships, or one-off paid opportunities will be allowed to take them. Only the top 1% of star college athletes will really be affected—mostly DI star quarterbacks like Clemson’s Trevor Lawrence or LSU’s Joe Burrow (by 2021, both of them will be in the NFL). But it does mean that past infamous examples of NCAA violations, like when former Texas A&M quarterback Johnny Manziel was penalized for taking money to sign autographs, would no longer be violations.
More significantly, 2020 will clearly bring the continued easing of the NCAA’s vociferous stance on “amateurism.” The governing body of college athletics will have to soften that thinking and make its peace with student athletes getting endorsements—and once that happens, more change could follow.
The big U.S. leagues distance themselves from China
A demonstrator wearing a Houston Rockets jersey sings the U.S. national anthem with fellow demonstrators during a rally at the Southorn Playground in Hong Kong, Tuesday, Oct. 15, 2019. (AP Photo/Mark Schiefelbein)
In October, a single tweet rocked the NBA to its core. After Houston Rockets GM Daryl Morey tweeted his support for the pro-democracy protesters in Hong Kong, the NBA’s meticulously-built business relationships in China cracked. CCTV (China Central Television) stopped airing Rockets games, Tencent stopped streaming them, Alibaba pulled Rockets merchandise from its online NBA store, and Anta suspended sneaker contract renewal talks, to name just a few examples. NBA fans in both China and America protested the NBA’s handling of the events, as well as LeBron James’s initial public comments.
Tencent has since begun showing NBA games again, while CCTV has not. And the China story has gone quiet as sports media have moved on to a different problem for the NBA: a nearly 20% decline in TV ratings through the first two months of the season. But you can bet that the other pro leagues took note of the political crisis and the damage it might have done to the NBA’s reputation at home as the most open, progressive league.
MLB Commissioner Rob Manfred, when asked about the NBA and China, told Yahoo Finance, “Sooner or later, something happens to everybody. Your time is going to come. And we try to pay attention as to how they handle crises like these and problems like these and how they try to move forward... In terms of our own business, we have tried to invest in countries to grow the game where we feel like we have a stable, sustainable relationship with the government that’s in power.” The NBA, it appears, did not have such a stable relationship with the Chinese government—when one executive tweeted one thing China didn’t like, the NBA’s business partners in China attempted to clamp down and exert control.
Meanwhile in the U.K., English Premier League football club Arsenal is having a similar political problem in China, after its player Mesut Ozil criticized the Chinese government for its treatment of Uighur Muslims. CCTV and PPTV briefly pulled its broadcasting of Arsenal matches.
The result of all this? Expect to see other leagues distance themselves from China. No league had made anywhere close to the same inroads in China as the NBA had anyway, but MLB has a few gaming partnerships there. It’s no wonder NBA deputy commissioner Mark Tatum is already talking about Japan instead. The NBA will remain big in China, but expect it to focus its international expansion efforts on markets like Japan, India, South Korea, and The Philippines. The NFL has also been aggressively expanding abroad by holding games in London and Mexico; don’t expect NFL Commissioner Roger Goodell to touch China for a long time.
MLB doles out major punishments in Astros cheating scandal
Baseball commissioner Rob Manfred speaks to the media at the owners meeting in Arlington, Texas, Thursday, Nov. 21, 2019. (AP Photo/LM Otero)
Major League Baseball Commissioner Rob Manfred has not had to deal with a political crisis like the NBA (China) and NFL (Kaepernick protests) had to in recent years, but his problem may be worse: an insidious cheating scheme by the team that has been to two World Series in the past three years.
Former Astros pitcher Mike Fiers spilled the beans on the scheme in November when he told The Athletic that the Astros in 2017 had a camera set up in center field at Minute Maid Park that would record signs from the opposing team’s catcher; Astros players or staff in the dugout would instantly bang on trash cans to signal to Astros batters what pitch was coming.
Sign-stealing is rumored to be pervasive in pro baseball, but nothing this sophisticated, with cameras and with so many team members apparently aware and involved. Manfred told Yahoo Finance the league is investigating and will determine “how far up in the organization it went.” The most recent update was that the league has expanded its investigation to the past three Astros seasons, not just the World Series-winning 2017 season.
If the league finds coordinated wrongdoing, expect Manfred to feel pressured to do a lot more than a slap on the wrist. On the low end of punishments, Astros brass like GM Jeff Luhnow or manager A.J. Hinch could get banned from baseball; on the highest end, some think MLB could take away the Astros’ 2017 title, though that would be unprecedented.
Baseball fans are waiting in 2020 for the results of the investigation, and for punishments. And the waiting, as the New York Times writes, is “making the off-season awkward for everyone.” The investigation into the Astros is also likely to prompt a larger examination of sign-stealing in baseball.
Streaming platforms get more games
LA fan holds up a sign for CEO and founder of Amazon Jeff Bezos during a game between the New York Jets and Washington Redskins at FedExField on November 17, 2019 in Landover, Md. (Photo by Patrick McDermott/Getty Images)
When it comes to television viewing, this is an easy one: streaming live games is inevitable. The big broadcasters and cable networks may resist it, but the writing is on the wall. The NFL, in addition to its lucrative linear deals with CBS, NBC, Fox, and ESPN, now lets Amazon stream 10 Thursday Night Football games per season, and has a deal with Verizon to let it stream national games for free on the Yahoo Sports mobile app. Twitter has rights to stream a handful of MLB games and MLS games. ESPN in 2018 launched its ESPN+ platform for $4.99 per month and moved a number of live games over to the app exclusively. DAZN, the U.K. live sports OTT platform that launched in the U.S. in 2018, offers a serious lineup of boxing and MMA fights for one flat annual subscription fee and might prove to be a Pay-Per-View killer.
All of these TV giants see where the puck is headed.
The NFL’s television contracts expire in 2022, and some think a tech company like Amazon could bid for the Sunday Night Football package. While that might be a stretch, it is certain that the new contracts will include more streaming options for fans.
The NBA has seen a 17% ratings dip through the first two months of this season, and some big voices, including Dallas Mavericks owner Mark Cuban, specifically point the finger at the NBA putting its games on cable (ESPN and Turner-owned TNT) as opposed to broadcast. The NBA in 2014 signed an eye-popping $24 billion deal with Turner and ESPN good for nine years, expiring in 2024. When it comes time to re-up, the NBA might make a very different decision for where to put its games—streaming options for fans will be crucial in that decision.
Those contract renegotiation talks are already starting, but before either of those leagues announce new deals, they are likely to offer more games to tech partners in 2020, even if it frustrates their broadcast partners. Fan TV viewership trends demand it.
